Course: Strategy Analysis

20 February, 2019

Course: Strategy Analysis

Worked by: Indri Demirneli

                        Final project

Case 05 : Under Armour’s Strategy in 2014.

Q1. How strong are the competitive forces confronting Under Armour, Nike, and Adidas Group? Do a five-forces analysis to support your answer.

PepsiCo is one of the world’s largest snack and beverage company. It has several different strategies that have helped them become one of the leaders in their industry.

The strategy that PepsiCo uses best is the broad differentiation strategy and to diversify the company’s product portfolio, since it is a snack and beverage company, it appeals to everyone because it offers a wide variety of snacks and beverages that can range from healthy to unhealthy, such as Sun Chips and Tropicana to Lay's potato chips and Mountain Dew depending on what you crave at the time.

Another strategy that PepsiCo implements well is the low cost provider strategy, all of the snacks and beverages that PepsiCo produces appeal to all kinds of customers since the prices are so reasonable and affordable. Furthermore the company is focused on product innovation, close relationships with distribution allies and international expansion, which helps out their market greatly.

• The business strategy of PepsiCo Beverages North America is to improve the volume and market share in soft drinks by applying the unique strategy “Power of One”, which focuses on local distribution through placing Pepsi and Frito-Lay products side by side on shelves.
• The business strategy of Frito Lay North America is to develop “good-for-you” and “better-for-you” products that are healthier snacks and provide multiple flavors to its customers to create growth opportunities.
• The business strategy of PepsiCo Internationalis to increase the volume of snacks, beverages, and food outside North America by discovering new opportunities in different markets and understanding the local consumer taste preferences.
• The business strategy of Quaker Food North Americais to increase market share through applying the “good-for-you” and “better-for-you” strategy in hot and ready-to-eat cereals, pancake mixes and syrups, and rice and pasta side dishes in North America.

 Q 2.  Does Under Armour have any core competencies and, if so, what are they?

To answer the question about the assessment of the long-term attractiveness of the industries represented in PepsiCo’s business portfolio we will take help of the table token from the case.

Based on the information which is represented in the table, my assessment of long-term attractiveness is very good for all the business portfolios of PepsiCo. The strongest business portfolio and high opportunity for PepsiCo are Frito-Lay (both North America and International), Quakers and some types of soft drinks included ready to drink beverages, bottled water and energy drinks. Business units that are mentioned above have more growth opportunities because people across the globe are increasingly opting for “take and go” and most important for healthy snacks and soft drinks. As we can see from the table, the double and triple digit growth of international soft drink industry and salty snacks industry is representing strong growth opportunities because people in developing countries are also becoming increasingly health conscious in order to reduce health hazards and obesity.

Q 3. Does Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive competence?

PepsiCo has six major business units to diversify its product portfolio, which are Frito-Lay North America, PepsiCo Beverages North America, PepsiCo Carbonated Soft Drinks, PepsiCo International, Quaker Oats Products and Quaker Food North America. To answer the question about assessing the competitive strength of these major business units, we will use the competitive strength measure table.

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Based on the figures represented in the tables, we can see that Frito-Lay North America and PepsiCo Beverages North America are considered as a strong market contender in the industry because they have the score of competitive strength rating above 6.7. For the other two business units such as: Pepsi international in snack, cereals and beverage industry and Quaker in North America, we can say that they have a moderate competitive  strength compering to the other rivals due to its rating 3.7-6.7.